Question: Hi…. I am the original poster.
Answer: Well, we got ours free, but first of all we’re in Edmonton, Alberta, Canada, and mortgage-lender practices may be different here from elsewhere on that point.
Or it could be that we had already decided on firmly on our mortgage lender by the time we asked for the pre-approval–my bank that I’d dealt with for over twenty years and that got a lot of business from us–and the loan officer knew we would for sure be buying a house and they would for sure get the mortgage business from us. Also, there was a pretty stiff competition for mortgage business going on here at the time.
We took advantage of that stiff competition regarding our mortgage interest rate, too. We got quotes on interest rates from both our banks, then called other mortgage lenders for quotes, one of which offered a better interest rate than my bank had quoted. Then I talked to my bank again, and asked if they could match or beat that lower quote, as we’d really like to deal with them instead of someone new. IIRC, they changed their quote to a quarter of a percent less than the lowest interest rate we’d found. On a mortgage, a quarter of a percent is quite a bit. That’s when we said we’d go with my bank, and asked for the pre-approval.
Other things that might have helped with all this are that we’ve had the very best possible credit rating for many, many years, and were asking for a mortgage that was considerably less than mortgage lenders were willing to lend us.
You have to be careful about that: they’ll lend you more than you might be comfortable repaying and you’d end up being “house-poor”–so large a proportion of your income going into the house that you don’t have enough for everything else.
I’ve often noticed on the local tv real estate channel that many big expensive homes, when they show pictures of the interior, have very little and sometimes very poor furniture and very cheap-looking curtains, etc. I figure those people got in over their heads and found themselves “house poor” and that was likely the reason they were selling.
We were afraid of getting into that kind of a bind, which is why we wanted to exactly figure out all our costs ahead of time. We knew what our mortgage payments would be, all closing costs, mortgage insurance premium, house insurance premium, estimated increase in utility costs over those we had in the apartment, an estimated cost for house maintenance (which turned out to be very wrong, as I posted earlier). We made sure our costs would be manageable and still leave us enough each month to have money for other things we wanted to do.
Also when viewing these costs, *do not* count on getting raises; if anything, think of what you’d do if your income decreased somewhat. And don’t forget that things like taxes, insurance premiums, utilities, and maintenance costs always seem to go up, never down.
If we’d bought as expensive a house as the mortgage lenders were willing to back us for, we’d for sure have been “house poor” long before now. We bought our house in 1993 and everything house-related except our mortgage payment has gone up considerably since then–utilities by about a third. At the same time, so have the costs of other things like food, gas for the car, and on and on.
Of course the best way to keep mortgage payments down is to save up as big a down-payment as possible and take as small a mortgage loan as you can. This can involve being realistic about your needs as far as the kind of house you want to buy. IMO, most of us don’t really need as much house as we think we do.
Hope this helps, and good luck to you.
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